Retail Banking Technology Spending Forecasts 2022-2027: Growing Out of the Pandemic
Key research questions
- How much will retail banks invest in technology over the next five years?
- Which regions will grow most rapidly?
- What technology areas will see the strongest growth?
The retail banking industry is firmly back to focusing on revenue and profitability. With the worst effects of the pandemic now having receded, technology-driven initiatives to support growth are rising up the agenda and we will see IT investment increase strongly across the industry.
Global IT spending will reach $250 billion in 2022. This is an increase of 4.3% on 2021, and the outlook for 2023 is even more positive. Celent expects IT spending next year to reach $263 billion, an increase of 5.2% on 2022. After a period in which many projects were postponed, de-scoped and re-prioritised, there is a sense across the market of the need to catch up with the 'lost' period caused by Covid-19. As a result, global IT spending is expected to grow at an average annual rate of 4.6% over the period to 2027 when it will reach $308 billion.
These findings - and this report - draw on our new and improved forecast model. In early 2022 we decided to enhance our methodology with the launch of the Celent Banking IT Strategy Survey (CBISS). Through detailed conversations with close to 200 banks we have gathered granular insights on the leading technology priorities for the year ahead, as well as the products and processes that will see the greatest change. This is a key input to our forecast model, and has considerably increased the granularity and expanded the coverage of our dataset.
Key findings include:
- IT spending is bouncing back strongly from the pandemic, growing by 4.3% in 2022 to reach $250 billion.
- North America will be the biggest spending region in 2027, accounting for close to 33% of global IT investment.
- The most rapid growth will be seen in the Middle East & Africa, which will grow at an average rate of 5.4% to 2027.
- External services (which includes IT services and cloud spending) will grow at an annual average rage of 6.3% to 2027.
- Applications (which includes SaaS) will grow on average by 5.7% to 2027 and will remain the biggest overall spend area.
The lesson for the industry is clear. Despite some of the challenges on the horizon, many banks plan to keep investment in technology in order to support growth. Those without a clear strategy and the ability to respond risk falling behind the market.